JPMorgan Chase & Co.’s (JPM) pipeline of
clients from China seeking financing overseas has doubled from a
year ago to a record, led by developers seeking funds, said the
head of its China investment banking business.

“We saw a level of activity that we’ve never seen in the
past” by property companies tapping offshore debt markets, Fang
Fang, who is also managing director and Asia vice chairman for
New York-based JPMorgan, said in an interview yesterday. He
declined to provide specific figures. “We are seeing the return
of the equity investor as well.”

JPMorgan, the biggest U.S. lender by assets, is among banks
benefiting from a revival in overseas fundraising by China’s
largest developers, who aim to ease a cash crunch as home prices
drop and the government maintains curbs on the property market.
Last month, JPMorgan was among banks that arranged a $500
million bond sale by China Overseas Land & Investment Ltd. (688)

The U.S. bank’s ties to China go back to 1911, when it led
a syndicate in managing a railway company’s $7.5 million bond
sale. In 1921, Equitable Eastern Banking Corp., one of
JPMorgan’s predecessor firms, opened a Shanghai branch,
according to the lender’s website.

Lagging Behind Rivals

JPMorgan began offering investment banking services in
China in the middle of last year after tying with First Capital
Securities Co. (FISCPZ) as a joint-venture partner in March 2010. That
puts it behind rivals such as Goldman Sachs Group Inc. (GS), which in
2004 became the first Wall Street firm to firm to win an
underwriting license in China, and Zurich-based UBS AG, which
began operations on the mainland in 2006.

First Capital was ranked No. 24 in managing domestic
corporate bond sales for Chinese firms last year, and No. 23 in
arranging share sales, according to data compiled by Bloomberg.
Tying up with a local firm is a prerequisite for arranging share
and bond sales in China. The bank is still waiting to qualify
for a brokerage license in the nation.

Bank of America Corp., the second-biggest U.S. lender by
assets after JPMorgan, is accelerating its expansion in China
after doubling profit and boosting its workforce in the world’s
fastest-growing major economy last year. The Charlotte, North
Carolina-based bank plans to add as many as five branches in
China over the next two to three years, Huang Xiaoguang,
president of the Chinese unit, said last month.

Chinese companies’ borrowing costs fell to a one-year low,
boosting before Premier Wen Jiabao outlines an economic plan
focused on spurring growth at next week’s annual session of
parliament. Wen will open the National People’s Congress in
Beijing on March 5 by proposing increased local-government bond
sales and support for consumers and small companies, according
to Ping An Securities Co. and HSBC Holdings Plc. (HSBA)

Fundraising Revival

China’s biggest property companies are also planning to
sell dollar-bonds as demand returns after a six-month drought,
easing a cash crunch that continues to threaten smaller
developers.

Country Garden Holdings Co. (2007), controlled by China’s second-
richest woman, yesterday said it hired JPMorgan to raise as much
as $276 million from shares in Hong Kong, signaling a revival in
equity fund-raising as well.

“All these are positive signs that things are coming back,
so I’m hoping that our record pipeline will come into good
revenue this year,” Fang said in Beijing.

China’s home prices fell 0.3 percent in February from
January, the biggest decline in 19 months, SouFun Holdings Ltd. (SFUN),
owner of the nation’s biggest real-estate website, said
yesterday. Residential prices slid in 72 of 100 cities tracked
by the company last month, 12 more than in January, SouFun said.

Property Campaign

Wen began a campaign to rein in the real estate market in
2010 as property prices in 70 cities tracked by the government
posted double-digit growth in the six consecutive months through
July 2010. The measures included raising down-payments for
second-home purchases and banning buying third homes.

Last month, he reiterated that China won’t waiver on those
curbs, which aim to bring home prices to a “reasonable level.”
Although market mechanisms should play a fundamental role in the
property market, the government will maintain restrictions to
ensure fairness and stability, Wen was cited as saying by the
official Xinhua News Agency.

The developers “need to refinance their liability, they
need to pay up their land premium, construction costs,” Fang
said. “The property companies will continue to require
financing and the natural home for them is the offshore market
because the domestic market is shut to all of them.”

Offshore Yuan

More foreign companies from regions such as Latin America
and Australia will also begin to tap Hong Kong’s offshore yuan
market to raise funds in the Chinese currency, Fang said. Banks
will focus more on yuan products, trade settlement and
fundraising in pursuit of revenue and profit, he said.

A decline in trade settlement and reduced expectations for
yuan appreciation were the main reasons for the drop, Fang said.
China’s exports fell for the first time in two years in January
as factories closed for the weeklong Lunar New Year holiday and
as the European debt crisis sapped demand for Chinese goods.

Measures to increase the amount of yuan offshore will
probably be discussed by Chinese lawmakers next week during
annual legislative meetings in Beijing, Fang said. He will be
attending as a member of the Chinese People’s Political
Consultative Conference, an advisory group to the government
that meets in parallel to the lawmakers that are delegates to
the National People’s Congress.

Fang is preparing a proposal for the meetings on linking
the offshore market with more developed domestic fixed-income
and money markets. “That’s a hot subject on the agenda as
well,” he said. “That’s what I want to promote.”

Increased use of the yuan overseas can occur in parallel to
the convertibility of the Chinese currency, Fang said. It may
take eight years to 10 years for the yuan to reach full
convertibility, he said.